Outline The Major Features Of The Common Agricultural Policy As It Currently Operates. Consider The Problems Posed For The Policy By The Enlargement.

2600 words - 10 pages

When the nations of Europe got together to form a common market in the late 1950's, agriculture was important to their economies, and even more important to their cultures and societies. They therefore decided that they needed a Common Agricultural Policy (CAP). Created in 1962 under Article 39 of the Treaty of Rome, the CAP was the birth of what was called "Green Europe". It has been at the centre of debate during its history. It was reformed several times and with difficulty. The reason of the creation of the CAP was both economic and political. It was basically to encourage farmers to produce more food after the World War II (WWII) shortages, to stabilise the European Union (EU) agriculture market, guarantee EU farmers a market for their produce and guarantee level of comfort for agricultural community. Reasonable price for customers was also an objective. In the 1970s and 1980s, the CAP became extremely expensive due to overproduction of agricultural products that were subsidized.First, I will talk about the major features of the Common Agricultural Policy (CAP) as it currently operates and then I will speak about the problems posed for the CAP by the next enlargement.I The major features of the CAP as it currently operates.The CAP is one of the longest established elements of common policy in Europe. Its overall aims were enshrined in the original Treaty of Rome and included protection of farm incomes, market stabilisation and ensuring security of supplies to consumers. These aims were pursued through a mix of mechanisms applied to the principal commodities of the Community's producers, notably dairy products, beef and arable crops. The CAP has developed a range of 'structural support' policies over the past 30 years, offering farmers help to restructure and modernise their enterprises. (Grant.W, 1997).The CAP can be divided into two kinds of support. On the one hand, we have the commodity support regimes which target specific agricultural outputs (89% of the budget) and on the other hand, there are the broader kinds of support for structural adjustment, diversification and environmental management (11% of the budget). Together these instruments cost the EU budget a total of around 43 billion per year. (Link 1, European Commission, 2004).CAP"First Pillar"Common Market Organisations* Intervention Prices* Direct Payments38,6 bi in 2002 "Second Pillar"Rural Development* Accompanying measures* Investments in Holdings* Agri-Tourism4,4 bi in 2002Source: EuromonitorIn the first one, one finds a variety of regimes which include those offering a high degree of market support as well as those offering only minimal support. Some regimes rely heavily on classic market intervention mechanisms, fixing guaranteed minimum prices within the EU and maintaining these by intervention buying when markets get oversupplied or by applying quotas on production, and applying import tariffs and export subsidies to maintain differentials with world market prices (Link:...

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